New Insights on the Importance of Agency Costs for Corporate Debt Maturity Decisions
Applied Financial Economics Letters, Vol. 1, pp. 233–238, 2005
12 Pages Posted: 7 Dec 2009
Date Written: 2005
This study provides new insights on the relationship between corporate debt maturity and agency costs by investigating empirically the impact of managerial ownership and the divergence between control and cash-flow rights on debt maturity. A significant negative effect of managerial ownership on debt maturity is observed. Moreover, the results reveal that the wedge between control and cash-flow rights also exerts a negative influence. The analysis further suggests that the negative effect of managerial ownership decreases in widely-held firms and increases with the discrepancy between control and cash-flow rights.
Keywords: Debt maturity, agency costs, managerial ownership
JEL Classification: G3, G32
Suggested Citation: Suggested Citation